I am 72 years old, have $3 million in savings and want to live with my son when he is married and has children. Can I afford two apartments?

I am 72 years old and have total assets of $3 million. I was a single mother and my son is now 26 years old, he works for the government and has a serious girlfriend. I stay with my son when I go to visit him, even though I hate DC, AND I miss it when I’m in my apartment at Southern California too long.

When he moves in with his girlfriend, I’ll have to buy an apartment for a minimum of $30,000 a year. I’m afraid this won’t leave me money for a place anywhere else, except in Southern California, maybe Florida, which is closer, for another $30,000. I am in good health, although I suffer from arthritis. I train a lot and eat healthy. I hope to be able to help with the grandchildren, although I will be so old that I will want to help as much as possible.

Can I afford two apartments? I wish I could live with them in a “mother-in-law” apartment one day if they move to the suburbs of DC, but unfortunately not in the near future.

See: We are 70 years old, have $1.3 million in IRA and $1.15 million in cash. But we have no idea what to do with the money.

Dear reader,

There are a lot of moving parts in this letter, but if your goal is to be in two places, it’s possible, with a lot of planning. What you really need to do now is take your plans seriously and start mapping them out, regardless of whether your child is already married.

For example, you say you want to live with your son and his future wife and help raise the grandchildren – is that full time? Or are you hoping to split your time in the future, whether you have grandchildren or not? There’s no wrong answer: Many people don’t live near their relatives, and others like to live in one place for half the year and another for the second half.

Before you get too involved with the idea of ​​living with your child and their future family, you should find out what they might want. Many families live with multiple generations, so it’s certainly not unheard of, but if you have the resources to live on your own and nearby, what would all parties involved appreciate most?

What would the living conditions and also the financial ones be like? It’s unclear how serious your son and his girlfriend are, so having these conversations with both of you may be premature, but you can try discussing these ideas with your son while you’re making your plans. Just make sure you cover all the ground.

Income versus liabilities

There are many factors that determine whether or not you can afford two apartments. And you won’t be able to do real financial planning until you have clearer answers. But you can start mapping out your visions for retirement. Get a notebook or spreadsheet and list all of your income: Social Security, any pensions, current withdrawals from retirement assets, and anything else. Then look at your liabilities, which include any debt payments, as well as the ongoing expenses of renting or owning a home (the rent or mortgage itself, utilities, taxes, and insurance, just to name a few) some). What do your cash inflows and outflows look like, and how do they change when you change the variables to incorporate two apartments?

Do this research with an open mind. For example, you’re looking to get an apartment for around $30,000 in each zone, which equates to around $2,500 a month (for two). Of course, this can be in the form of a rent or mortgage. Would you like to do both: own a home, perhaps in the “main” area you want to be in, close to your family, and then rent another for a few months of the year, in a warm climate like California or Florida? (If you wish to have a tax domicile: Florida has no state income tax.)

Equity versus flexibility

If you were to own a home, you would preserve some of your equity by investing in real estate. Not everyone wants to own, but it’s an asset you could draw on in later life or bequeath to your family. And if you rented a place for a few months a year, even during the winter months, you wouldn’t need to sign a lease, which could tie up your money for a year or more. You would have more flexibility and you wouldn’t even have to worry about subletting.

In any case, start monitoring rental and housing costs in your points of interest. Go to real estate sites like Realtor, Redfin RDFN,
and Zillow Z,
and get average prices for the types of places you’re looking for, as well as area sales history to see how prices have increased over the years. If you’re not looking to buy or rent in two places right away, these figures will likely fluctuate (upward), but at least you have an idea of ​​the markets you’re interested in. This will help you make informed decisions and you will have a better idea if you really want to be in two places (or not).

During all of this planning, think carefully about the other expenses you’ll incur: healthcare (a huge expense), groceries, taxes, travel (especially if you’re going back and forth to both sides of the country), and so on.

It’s wonderful that you are doing well overall and that you want to be there for your son and his future family. Being open with him about these ideas might actually give you a better idea about how to properly plan for the future.

See also: ‘I hope to stay in my home’: I am 76 years old and have no relatives. What should I do with my assets?

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *